Small brands take on big players

William A. Vitner is feeling the supermarket squeeze. With Frito-Lay Inc.'s growing dominance of the supermarket snack aisle, Mr. Vitner says his 75-year-old family business, C. J. Vitner & Co., is having a much harder time getting its potato chips on store shelves.

Dominick's Finer Foods and Jewel Food Stores both used to carry Vitner's chips in all their stores; now, the snack sells in just four Dominick's and some 35 Jewels.

"It's odd that you could have a great product and be around for 75 years and not be able to play in their backyards," grumbles Mr. Vitner, president of the Chicago-based company, which generates about $50 million in annual sales.

It's a familiar refrain from executives at many small Chicago-area food companies, from Vienna Sausage Manufacturing Co. to tortilla maker Azteca Foods Inc. While the battle for shelf space has always been difficult for small food makers, it's become even tougher as industry behemoths like Kraft Foods Inc. and supermarket chains like Dominick's have beefed up through mergers and acquisitions.

Many small food processors point the finger at "slotting allowances"--the controversial fees that food companies must pay to get many of their products on store shelves.

Others say grocery chains have centralized their buying, giving the edge to big companies that can cut national deals and taking away the decision-making authority from the local buyers who know regional brands.

Still others contend that consolidation among food brokers has made it harder for small manufacturers to find a sales representative to push their products beyond their home turf.

"It's a challenge, definitely more so than before," says James Bodman, co-chairman and co-CEO of Vienna Sausage, whose hot dogs, soups, pickles and other products generate about $103 million in annual sales. "Companies like ours aren't given any particular favors by the chain stores."

Complete coverage of this story appears in the Sept. 17 issue of Crain's Chicago Business.